Amid a fresh wave of merger mania among the world’s exchanges, a new trend may be emerging that sees smaller as better. According to a recent Wall Street Journal article, some entrepreneurs are hoping to do to stock offerings what local farmers’ markets do to grocery shopping. By creating a local stock market, Lancaster, Penn. is hoping to give companies the opportunity to raise money from local investors, rather than depending on institutionals and big banks with the creation of LanX. (more…)
The trading world seems to be both expanding and contracting with the back-to-back announcements of two exchange group mergers. First is the London Stock Exchange (LSE) merging with the TMX Group, owner of the Toronto and Montreal exchanges. The combined market capitalization would be almost $7 billion. Next, the NYSE/Euronext and Deutsche Börse (DB), whose boards voted to merge on Feb. 15. That exchange could have a market capitalization of $24 billion. Derivative volume wise, it would mean about 5 billion contracts traded yearly, forming for the most part a single derivatives exchange in Europe. (See “Mega exchange on horizon?“) (more…)
There have been a number of theories floated regarding what caused last Thursday’s “flash crash” in equity markets but to date no one has provided a definitive explanation.
The first story was that someone keyed in “B” for billion instead of “M” for million on an equity order in Procter & Gamble. P&G was one of the first stocks where odd price behavior was observed, which is probably the essence of that rumor. That has never been confirmed and I am not sure of any system that accept orders that way, most you must enter the numeric value — hence the term fat fingered error (holding down the zero key for an extra beat increasing the order X10, X100 or X1,000). A larger broker dealer that was cited in several stories denied that a fat fingered error by one of its traders was the cause of the crash. (more…)
It doesn’t seem that long ago when a beaming Terry Duffy, Craig Donohue, Leo Melamed, Jack Sandner, Jim McNulty and Dick Grasso rang the opening bell at the New York Stock Exchange on the day the Chicago Mercantile Exchange went public. It was Dec. 6, 2002 and was one of the most significant and successful initial public offerings of this century.
The Merc launched that day with an offering price of $35. That price would grow to more than $700 five years later and although the CME has lost about half its value since the December 2007 high, if you asked CME leaders in 2002 if they would take 1,000% growth in five and a half years they would probably have taken it.
